Transcript Slide 1

Pro-competitive EU Framework delivered a success
story: affordability, higher speeds, more investment
Broadband Price Development
50
40
30
Weighted Avg
price per Mbps
20
Weighted
Average
10
1Q12
1Q11
1Q10
1Q09
1Q08
1Q07
1Q06
1Q05
1Q04
1Q03
0
Actual Dowload Speeds: Europe and USA
50
Mbps
40
30
Europe
20
USA
10
0
xDSL
Cable
FTTx
2
Financial performance consistent: incumbents more
profitable than entrants (Source: Webb Henderson & SPC Network)
EBIT Margins
20%
15%
Average EU
Incumbents
Average Non-EU
Incumbents
Average EU Entrants
10%
5%
0%
2008
2009
2010
2011
2012
Deutsche Bank forecasts
incumbents’ weighted average
EBIT margins to be 14.6% and
16.8% in 2013 and 2014
respectively, whilst entrants’ EBIT
margin will be 11.0% and 11.9%
in the same period
Capex and Percentage of Sales
Entrants have been investing
more as percentage of sales in all
of past five years. Incumbents
have higher absolute investment
due to larger size.
20%
Average EU
incumbents
15%
10%
Average non-EU
Incumbents
5%
0%
2008 2009 2010 2011 2012
Average EU
Entrants
3
Telecoms shares are overall not
underperforming (Source: Bloomberg & JP Morgan Cazenove)
4
NGA investments are increasing and on par with
US
 54% NGA coverage according to DAE Scoreboard (up from
49%)
 Comparable FTTC & FTTH coverage in EU & US (Source: FTTH
Council & BCE by Telage)
EU
Households VDSL
FTTH
207,500,000 51,181,211 27,418,981
24.7%
13.2%
US
Households VDSL
FTTH
132,300,000 24,500,000 20,000,000
18.5%
15.1%
NGA %
37.88%
33.64%
5
100% NGA coverage is affordable (FTTC by Point
Topic)
Urban
149 mn
homes
71%
population
EUR 8 bn
Semirural
31.4 mn
homes
15%
population
EUR 22 bn
Rural
29.3 mn
homes
14%
population
EUR 52 bn
6
Fast & superfast BB take-up is low & stagnating
7
Competition on NGA limited – hard-won
liberalisation benefits at risk
 Entrant share of
Fibre LLU
Copper SLU
Copper LLU
and fibre WBA
and VDSL WBA
and ADSL WBA
in % of SMP operator’s FTTH
in % of SMP operator’s FTTN
in % of SMP operator’s copper
lines
lines
lines
AT
0,0%
0,0%
20,0%
BE
0,0%
1,0% 4
4,9%
CH
0,0%
0,0%
no data
DE
0,0%
<5%
42,9%
DK
no data
no data
24,8%
ES
0,0%
0,0%
37,8%
FR
0,0%
No FTTN/VDSL roll-out
54,6%
HU
0,0%
no data
17,1%
IE
0,0%
0,0%
33,5%
IT
0,0%
No FTTN/VDSL roll-out
45,7%
NL
5-10%
0-5%
26,8%
PL
0,0%
no data
22,0%
PT
0,0%
no data
21,4%
RO
0,0%
0,0%
0,1%
SE
no data
no data
33,6%
TR
0,0%
no data
no data
UK
<1%
no data
47,4%
incumbent NGA
lines minimal
even where
regulation applies
(where data
available)
 Compares with
shares of 30%+
for copper lines
8
Affordability & speed are the most important
factors when choosing a BB subscription
9
Competition necessary to drive take-up of NGA
networks (cf. historic development of DSL)


All major leading broadband countries including Germany, France, UK and Nordics have benefited from
‘unbundling’ of the copper network
Competition brought lower prices and new services (€30 triple play in France)
10
High market shares and low customer
satisfaction in business services
 Results of end-user survey data (WIK – Jan 2013)
 69% business users prefer to use a single supplier for all sites (within and cross country)
and services, but only 53% of those preferring a single supplier found this was normally
a practical option
 More than 50% of respondents cite problems sourcing fixed and mobile telephony or
data from same supplier. More than 40% cite problems finding single supplier able to
cover all sites or offer a consistent service across all relevant countries
 In 46% cases, respondents claimed it was rare to have more than 1 or 2 suppliers able to
make a suitable offer
 Survey results consistent with 2009 end-user survey for European Regulators Group
(ERG)
 Retail business market shares >50% - higher for multi-site business
 Available market share data in retail business services (eg CMT 2011) show incumbents
retain >50% in most segments, with higher market shares for larger multi-site
businesses
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Market shares for multi-site business
 Example: Telefonica’s market share depending on number of sites and
customer bill
Customer Bill
1 site
2-5 sites
6-10 sites
11 and more
sites
Total
Less than 600
45-60%
45-60%
1-5%
<1%
45-60%
From 600 to 1.500
45-60%
>75%
5-15%
<1%
45-60%
From 1.500 to 6.000
35-45%
>75%
45-60%
5-15%
45-60%
From 6.000 – 12.000
15-25%
>75%
>75%
25-35%
45-60%
From 12.000 – 30.000
15-25%
60-75%
>75%
45-60%
45-60%
5-15%
35-45%
60-75%
60-75%
45-60%
5-15%
15-25%
45-60%
60-75%
45-60%
More than 300.000
5-15%
15-25%
25-35%
>75%
60-75%
Total
35-45%
60-75%
60-75%
>75%
45-60%
From 30.000 to
100.000
From 100.000 to
300.000
Source: CMT (2011)
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